New Insights on the Importance of Agency Costs for Corporate Debt Maturity Decisions

Applied Financial Economics Letters, Vol. 1, pp. 233–238, 2005

12 Pages Posted: 7 Dec 2009

See all articles by Aydin Ozkan

Aydin Ozkan

Hull University Business School (HUBS)

Yilmaz Guney

University of Hull

Date Written: 2005

Abstract

This study provides new insights on the relationship between corporate debt maturity and agency costs by investigating empirically the impact of managerial ownership and the divergence between control and cash-flow rights on debt maturity. A significant negative effect of managerial ownership on debt maturity is observed. Moreover, the results reveal that the wedge between control and cash-flow rights also exerts a negative influence. The analysis further suggests that the negative effect of managerial ownership decreases in widely-held firms and increases with the discrepancy between control and cash-flow rights.

Keywords: Debt maturity, agency costs, managerial ownership

JEL Classification: G3, G32

Suggested Citation

Ozkan, Aydin and Guney, Yilmaz, New Insights on the Importance of Agency Costs for Corporate Debt Maturity Decisions (2005). Applied Financial Economics Letters, Vol. 1, pp. 233–238, 2005. Available at SSRN: https://ssrn.com/abstract=1517108

Aydin Ozkan

Hull University Business School (HUBS) ( email )

Hull, HU6 7RX
United Kingdom

Yilmaz Guney (Contact Author)

University of Hull ( email )

Hull, HU6 7RX
United Kingdom

HOME PAGE: http://https://www.hull.ac.uk/faculties/fblp/hubs.aspx

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